NIL in Congress: What to Expect in House Hearing on ‘Dealmaking’
NIL has come a long way since Ed O’Bannon sued the NCAA over the unauthorized and uncompensated use of players’ identities in video games.
Another turning point could happen on Wednesday morning.
More from Sportico.com
Varsity Strikes $43 Million Settlement With Antitrust Accusers
NCAA Volunteer Coaches Sue College 'Cartel' for Price Fixing
For the first time since Charlie Baker took over as NCAA president and the Republicans gained a majority in the House of Representatives, the House will hold a hearing on NIL.
The Innovation, Data, and Commerce Subcommittee will discuss “Taking the Buzzer Beater to the Bank: Protecting College Athletes’ NIL Dealmaking Rights.”
Members will question the following witnesses: Patriot League commissioner Jennifer Heppel; Virginia State president Makola Abdullah; former NFL player Trey Burton; Florida State softball player Kaley Mudge; Washington State athletic director Pat Chun and College Football Players Association executive director Jason Stahl. The hearing will be livestreamed at this link, beginning at 10:30 a.m. ET.
Subcommittee chair Gus Bilirakis will be a key voice. As he explained in his recent Sportico op-ed, Bilirakis supports a national standard for NIL, meaning one that would eliminate state-by-state differences. The NCAA has sought a national standard from Congress for several years, but no NIL bill has made it out of committee, let alone for a floor vote.
Bilirakis warned of “powerful booster-led collectives” that dangle “inducements in front of high schoolers.” He wants legislation that would “establish protections at the federal level to protect student athletes from bad actors or deceptive boosters.”
Expect some members of Congress to question why the NCAA can’t police collectives and “bad actors” on its own.
It’s not as if the NCAA hasn’t tried. It recently implemented a bylaw that permits the finding of impermissible conduct with NIL when warranted by circumstantial evidence. This permissive standard could authorize the NCAA to find wrongdoing in the absence of a witness statement or admission. A suspicious social media post could prove sufficient.
The NCAA has worried that more aggressive attempts to curb pay-for-play might run afoul of antitrust law. In 2021, the U.S. Supreme Court held in NCAA v. Alston that the NCAA, like other businesses, is subject to ordinary antitrust scrutiny. Whenever the NCAA and its member schools—which, crucially for antitrust law, are competing businesses—join hands to limit how each school competes, there is a potential antitrust problem.
But NCAA antitrust concerns may be exaggerated. The NCAA lost O’Bannon and Alston because of “all or nothing” rules that denied any compensation and were intentionally rigid. More flexible and adaptive rules tend to withstand antitrust scrutiny. Empirical evidence also shows most antitrust lawsuits fail to prove liability. Plus, in Alston, the antitrust violation only concerned education-related expenses, not traditional pay-for-play prohibitions. Both Republicans and Democrats have also openly questioned the merits of antitrust exemptions for sports leagues.
Wednesday’s discussion could also delve into the risk of unintended consequences. For instance, how would a federal NIL statute that preempts state NIL laws intersect with states’ rights of publicity?
NIL is a subset of the right of publicity, which varies by state law and protects a person’s identity from commercial exploitation. In some states it extends into signature, voice and other uniquely identifying features, and sometimes extends for many years after a person dies. The right of publicity is highly relevant to musicians, actors and other entertainers, as well as their estates. It is also critical for influencers, some of whom are college athletes. A federal NIL statute that doesn’t clearly distinguish NIL from rights of publicity could spark confusion.
Recent comments by Baker are also likely to garner discussion. Last week, he extolled the virtues of a “uniform standard contract” for NIL, “so that when somebody signs it, they know they’re signing the same kind of agreement everybody else is signing.”
Standard contracts are familiar in sports, though not in the way Baker suggested. In the major pro leagues, players’ employment contracts are largely “uniform.” Leagues and players’ associations bargain a contract form and attach it to a CBA. This approach promotes “fair play” among competing teams since they must all use the same form. Both teams and players are also on notice as to what is, and isn’t, permissible compensation. Employment contracts, like other provisions in a CBA, are exempt from antitrust scrutiny.
But endorsement and influencing deals between athletes and the businesses aren’t “uniform” and aren’t exempt from antitrust scrutiny. These contracts vary in range, value and structure. Some deals run into the millions of dollars; others are for free sneakers.
Endorsements also define athlete restrictions varyingly. A national sneaker company has different views on who counts as a “competitor” than would a local pizzeria or car dealership. Language for intellectual property and morals clauses also tend to vary. Creating a uniform structure seems challenging.
Baker also voiced a desire for “consumer protections for families and student athletes around NIL.” It’s not clear why existing consumer protection laws, both at the state and federal level, are insufficient for NIL, or why more government regulation would be advantageous and not conflict with existing laws. It’s also uncertain why the NCAA can’t attempt to enact its own set of consumer protections for families and athletes. If the concern is antitrust, see above.
The panel could also incorporate recent debate on TikTok, a popular app for some college athlete influencers. Last week, TikTok CEO Shou Zi Chew testified before the House Committee on Energy and Commerce, which oversees the Innovation, Data, and Commerce Subcommittee. There is support among both Republicans and Democrats to ban TikTok, which as Sportico explained, could spark legal challenges by athletes and others who use TikTok to generate income.
Whether the hearing sticks to NIL is uncertain. As is common practice, members sometimes ask witnesses about topics outside of the hearing’s subject matter. In a Senate hearing on NIL in 2021, Senators asked then-NCAA president Mark Emmert about revenue sharing, health care benefits and eligibility of transgender athletes.
On Wednesday, the hearing could migrate into discussion on college athletes as employees and accompanying litigation and NLRB action. In an interview with Sportico, Baker envisioned two groups of college athletes, one in line with traditional views of “student-athletes” and the other that play “big-time college sports.” Witnesses should be prepared to discuss what exactly Baker might mean by that distinction.
